1. Field of the Invention
The present invention generally relates to decision support systems for manufacturing or service operations and, more particularly, to decision support systems for providing evaluation and recommendations in regard to allocation of resources relative to demand, especially for commodities, and supporting the trading of capacity, inventory and orders.
2. Description of the Prior Art
Many manufacturers are currently engaged in the manufacture of commodities or materials which are manufactured to order and supplied to customers. Paper, fabrics, structural metal and lumber are but a few examples of such commodities, each of which may comprise different products of different qualities or specifications and which be may made on shared equipment. Other business concerns may provide services which similarly rely on equipment (e.g. trucks for transportation, distribution infrastructure for utilities, power plants for energy and the like) which represents a substantial capital cost. That is, very large, complex and expensive machinery is often utilized for enabling efficient production of a commodity or service having any of a number of combinations of qualities and specifications. Of course, the overall efficiency of the machine, including amortization of its cost and maintenance, will be dependent on how the machine is operated to fill orders from customers.
(While the invention will be described in terms of goods which can be supplied from an inventory of manufactured stock material references to manufacturers should be understood as being inclusive of relatively capital intensive service industries. Accordingly, while the term "production capacity or "manufacturing capacity", these and similar terms should be more generally understood as "performance capacity" which is inclusive of both the capacity to produce goods and capacity to perform or otherwise supply services.)
For example, the paper making industry presents some particularly complex problems. When a commercial grade of paper (e.g. other than specialty papers which are sometimes made manually in individual sheets by traditional processes) is initially made, a large, high-capacity machine is used which has an arbitrarily large web, often twenty feet wide or more, the width of which cannot readily be altered. This machine will be capable of producing paper of that width in a number of grades (e.g. newsprint, bond, etc.), weights, finishes and the like from many different compositions of materials (e.g. wood or cloth fiber and mixtures thereof) but only one set of such specifications can be accommodated at any given time.
Therefore, the production of goods having differing specifications must be scheduled including setup time including the time for making transitional product (e.g. having a mixture of constituent compositions between intended compositions) and the risks of other contingencies when specifications are to be changed. Since set-up time and the time during which transitional product is produced as well as risks of certain contingencies all carry economic costs, efficient use of such a large capacity machine requires that the manufacturing schedules contain as few transitions as possible.
The paper produced by such large-capacity machines will be formed in a wide continuous sheet of approximately the same width as the web. This sheet is wound onto a reel and transported to another large machine where it is unrolled, slit into desired widths and again wound onto rolls of desired dimensions which will be specified in the order. For example, printing presses used for large-circulation newspapers, magazines and the like will have certain maximum capacities for width and diameter of the paper roll and a specification of the diameter of the core (e.g. a cardboard tube on which the paper roll is wound). Paper will be ordered to match these specifications to avoid or minimize printing press down-time when a new roll of paper must be loaded into the press and the number of times the press operation must be halted to do so.
It is known that when the grade, weight, finish, fiber content, etc. of paper being manufactured is changed, a quantity of paper will be produced during the transition which does not meet the specification of any order and can only be sold, if at all, at a much reduced price. If the paper cannot be sold, the material in the paper must be recycled and the production capacity of the machine during the transition period is completely lost along with the wear on the paper-making machine and other economic costs, as alluded to above. The economic cost of this paper, possible recycling and machine wear and amortization must be included in the cost of set-up time to make adjustments to the paper-making machine and during which no marketable paper is produced. It is also recognized in the industry that malfunctions such as tearing of the paper web (which may require several hours of labor by a skilled maintenance crew to correct) become much more likely during such transitions.
In addition, the widths into which the paper must be cut to conform to orders may involve substantial waste when the combination of widths of rolls of a single grade of paper (referred to as the "deckle") corresponding to a combination of existing or anticipated orders for the same grade of paper does not closely match the width of the continuous sheet (which, in turn, matches the width of the web of the machine). Further complications may arise since, for example, the paper slitting apparatus may not concurrently accommodate different core sizes, the production of narrow rolls will increase the number of rolls made from a reel of paper and cause a "bottleneck" in further roll wrapping operations, the acceptance of an order may cause delay in delivery of other orders which may or may not be tolerable to the customers, and the like.
Accordingly, orders for paper which cannot be scheduled with other orders for paper of the same specifications (in order to limit machine transitions) or which do not trim well in combination with other orders (to limit waste) cannot be efficiently manufactured. The manufacturer must therefore determine whether to accept or reject each order based on numerous objective but qualitative criteria such as profitability, customer satisfaction, effect on manufacturing, machine and delivery schedules and the like. However, rejection of an offer or late delivery of an order may have an adverse effect (and in differing degree) on further orders from particular customers. Therefore, some manufacturers maintain some level of inventory to avoid the need to reject orders although others (principally dealing in unique sizes that are difficult to sell) seek to maintain as small an inventory as possible.
While customer orders generally will first be filled from inventory, if possible, the economic costs of maintaining inventory are becoming significant to a degree that inventories of respective manufacturers are usually kept as small as possible. Further, it is desirable from the standpoint of flexibility in filling orders to maintain the product in inventory in a form which can be further processed to the customer's specifications. For example, it would be desirable to maintain paper in the full-width reels rather than cut rolls so that customer specified roll sizes can be accommodated. Therefore, filling orders from inventory does not provide a complete solution to problems of manufacturing efficiency since there is an economic cost to the maintenance of the inventory, itself, and the further processing of inventory to meet order specifications may entail significant levels of waste.
Accordingly, if a manufacturer has insufficient quantity of a product in inventory to fill the order or the rework of inventory product would entail unacceptable waste, it has become customary for the manufacturer to seek to purchase existing product from the inventory of one or more other manufacturers to complete the order rather than incur the setup cost and risks (e.g. machine downtime, production of transition product and the risk of paper breakage) to produce a product other than that being presently manufactured since the setup costs will reduce the profitability of filling the order. However, other manufacturers will be seeking to minimize inventory, as well, and it is generally the case that an acceptance of an order will require that manufacturing time be scheduled on a particular machine, preferably in combination with other orders for the same grade and quality of material.
Unfortunately, filling order by purchase of inventory from another manufacturer is generally the limit of current practices and carries its own business risks. For example, the purchasing manufacturer will be less able to assure product quality and that the product will meet the expected specifications. Further, a customer discovering that an order has been filled from the inventory of another manufacturer may seek to place further orders directly with that manufacturer. Purchase from another manufacturers inventory also involves additional costs such as in transportation, relabelling and the like.
The process of filling orders from another manufacturer's inventory has also been cumbersome and difficult to carry out within the response time for accepting or rejecting an order since a sufficient quantity of the product must be located and terms for its sale negotiated between manufacturers, generally by a sequence of telephone calls. However, in recent years, communication of inventory information over computer network links between manufacturers has become more common and has expedited the process substantially.
Nevertheless, trading from existing inventory of manufacturers remains an incomplete solution to realizing substantially full economy in manufacturing since the availability of a sufficient quantity of goods at a suitable cost is not guaranteed, the process is cumbersome and protracted and, at best, presents unavoidable business risks while generally compromising economy and profitability at least to the extent of the economic cost of maintaining inventory against the potential costs and risks of additional transitions for machine set-up, manufacture of transitional product and the like, as discussed above. Further, while it may be possible to communicate inventory information easily and in a timely manner over computer network links, there has been no arrangement for presenting numerous scenarios from order and inventory information to a decision maker in order to support business decisions, especially those which may involve concerns such as customer service and satisfaction which may not be easily quantifiable or represented in anecdotal information or the judgment of the decision maker.
However, the inventors have recognized that further economies could be potentially derived from trading of future manufacturing capacity rather than simply purchasing from existing inventories. Unfortunately, the evaluation of prices consistent with scheduling across a plurality of manufacturers adds even more complexity to the problem of determining conditions and terms under which trading of manufacturing capacity would be mutually beneficial among two or more manufacturers.
Specifically, another manufacturer's excess manufacturing capacity may even be more economically exploited if the production of the order cannot be readily or efficiently combined and scheduled with other orders on the available production resources of the manufacturer receiving the order. In any such case, the trading of manufacturing capacity between manufacturers would generally tend to increase the efficiency with which both manufacturers can conduct their respective manufacturing operations while satisfying the requirements of their respective customers. However, while the existence of inventory can generally be readily determined and other costs such as labelling, transportation and potential overhead costs can be estimated, it is considerably less apparent whether any given manufacturer has suitable excess manufacturing capacity for a product meeting order specifications or whether or not it would be advantageous to make the product or, for that matter, how the economic advantages, if any, will compare among orders that are evaluated.
The question of whether to accept, reject or trade manufacturing capacity is, by nature, a very complex question of multiple objective optimization of the allocation and scheduling of machine manufacturing capacity, customer satisfaction and economic advantage within the terms, conditions and specifications of existing orders and/or those which can be anticipated with a suitable degree of confidence. Additionally, some of the objectives can be analyzed quantitatively while others should accommodate preferences such as some degree of flexibility in delivery dates, manufacturing overruns and underruns and the like. Quantitative evaluation may also obscure contingent information which may not be accommodated by the evaluation rules.
The question of whether manufacturing capacity exists raises the additional issues of delay of delivery dates for other products (and whether any delay will be tolerable for the customer) and whether the product specified in a particular order can be manufactured by the delivery date specified in the order, given the required setup time and the possibility of machine down-time during the manufacture of transitional product (e.g. paper breaks). Conversely, the terms of a particular order may be of sufficient economic advantage to cause acceptance of an order which requires trading for manufacturing capacity already scheduled for a machine in regard to an order which is of comparatively lesser economic advantage.
The evaluation of economic advantage in filling a particular order also requires consideration of the setup cost and risk against the potential profitability to be expected from meeting the demand. Further, beyond setup costs and risk, the production of product to meet demand (which may involve a combination of orders for the same product) may involve excessive production inefficiency. For example, an order may involve specifications (e.g. paper roll widths) which cannot be met without unacceptable waste if produced on an available machine, even when combined with other orders. Additionally, the cost of transportation from the manufacturing site to the required delivery location must be considered in evaluation of economic advantage, especially if manufacturing capacity is traded with another manufacturer having a manufacturing site remote from the delivery location.
Another complication in attempting to achieve economies across a plurality of manufacturers is that each manufacturer is likely to favor a different and potentially custom form of computer-supported decision making (e.g. a simple inventory database) if, indeed, any is used at all in the absence of available decision support systems useful for filling orders from stock manufactured materials. In general, each manufacturer will have relatively unique approaches to profitable business practices and a system which attempts to obtain economies over a plurality of manufacturers having different approaches to the conduct of their respective businesses is not likely to be accepted by all or even a majority of potential trading partners.
Currently, there is no facility whereby manufacturers can offer excess present demand or excess future manufacturing capacity to each other to facilitate trading thereof. Similarly, there is currently no facility or decision support system available for evaluating the economic advantage and manufacturing capacity for evaluation of an order, particularly in combination with a facility for offering excess demand or capacity, to determine whether an order should be rejected, accepted and/or traded, in whole or in part and the terms upon which trades can be offered to achieve some increase of efficiency and economic advantage among parties to a trade or purchase of manufacturing capacity.
In summary, no arrangement has been available which is able to function as a decision support system to present a plurality of different scenarios for filling a combination of customer orders for goods meeting particular specification from stock materials in inventory, much less including consideration of in-house production capacity or the inventory and/or production capacity of other manufacturers or allowing marketing of inventory and uncommitted production capacity to other manufacturers. It can also be appreciated that no system is currently available which permits efficient exploitation of network distribution of inventory and manufacturing capacity among manufacturers to facilitate business decisions which potentially increase manufacturing efficiency across a plurality of manufacturers for their mutual benefit while permitting independence of action and/or evaluation methodology in responding to such information. Further, no decision support system has been available which allows solutions to be developed which are based on arbitrary combinations of the above types of inventory and manufacturing capacity information.